Business aviation would benefit from return of depreciation rule
The House Committee on Ways and Means on May 14 approved what proponents call the "one, big, beautiful bill," which includes the return of bonus depreciation, a rule that allows businesses that purchase capital equipment, including aircraft, to claim 100 percent of the depreciation in the first year instead of spreading it over several years.
Aircraft manufacturers and aviation industry groups including the General Aviation Manufacturers Association and the National Business Aviation Association historically have supported bonus depreciation as a stimulus for aircraft sales and production. The benefit has come and gone a number of times over the years as administrations have sought to boost industry and create jobs.
President Donald Trump has made references to the planned return of bonus depreciation, including one during a March 4 speech before Congress outlining his tax and spending plans. “And just as we did before, we will provide 100 percent expensing. It will be retroactive to January 20th, 2025, and it was one of the main reasons why our tax cuts were so successful in our first term, giving us the most successful economy in the history of our country,” he said.
The Tax Cuts and Jobs Act of 2017 allowed full, immediate expensing of business equipment and other assets for companies that are too large to qualify for Section 179 expensing through 2022. Phaseout of the program began in 2023 with a reduction of the benefit from 100 percent to 80 percent. Similar cuts each year—to 60 percent in 2024, 40 percent in 2025, and so on—were set to bring the benefit to zero in 2027.
“Immediate expensing has been available for purchases of capital equipment as a provision of bipartisan congressional tax policy for decades, reflecting a longstanding consensus among leading economists that the policy helps American companies to upgrade the products and equipment they rely on to be competitive in a tough global marketplace,” said NBAA President and CEO Ed Bolen.
“This policy stimulates investment in a host of asset purchases, ranging from computers, to trucks, tractors and other types of business equipment, including aircraft.
“It also drives job creation and helps serve communities: Business aviation supports 1.3 million high-skill, high-paying manufacturing and service jobs, accounts for $340 billion in economic activity each year, and makes a positive contribution to the nation’s balance of trade. In short, this widely supported policy is good news for American citizens, companies and communities. We commend Chairman Smith and Members of the House Ways and Means Committee for ensuring its inclusion in the Committee’s tax provision.”
Potential beneficiaries of this policy cannot count on a bonus depreciation reboot becoming law. If the House votes in favor of the bill, it still must pass in the Senate through a process that typically results in revisions. Parts of the bill including the potential extension of bonus depreciation face criticism and opposition from members of the government and the public.
A March 3 report from the Congressional Research Service said the Joint Committee on Taxation previously estimated the cost of extending 100-percent bonus depreciation through 2034 would be $378 billion.
In a May 13 report the Committee for a Responsible Federal Budget estimated the revival of bonus depreciation would add $360 billion to the deficit between 2025 and 2034.
